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“We also see a reduction in Leverage, which we believe could allow ARCO to resume its dividend policy in 18+ and gives it optionality to accelerate unit growth,” analyst Jeronimo De Guzman wrote in a note.

Guzman noted that Arcos trades at 6.7x 2017 estimated EV/EBITDA, a 50 percent discount to the median multiple of 13.1x for Restaurant Brands QSR 4.77% peers. Shares are also trading about 22 percent off their historical forward multiple, compared to a premium for Brazil consumer stocks.

“We believe the shares can re-rate as growth accelerates and the company delivers more consistent results. We see 31% upside to our revised year-end 2017 price target of $8 (up from $5), which assumes the shares can trade at 8x'78 EBITDA in a year's time,” Guzman added.

At time of writing, shares of Arcos Dorados rose 6.15 percent to $6.47.